FG spends N8 billion on forex waiver for pilgrims

Posted by News Express | 8 August 2016 | 2,240 times

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With the express directive of the Federal Government to the Central Bank of Nigeria (CBN) to disburse scarce dollars to pilgrims at subsidised rate, it is splashing about N7. 9 billion ($24.9 million) as subsidy.

The amount (subsidy), which is an equivalent of some days’ trade volume at the illiquid interbank market due to scarcity, represents 38.22 per cent of the total value to be expended on the exercise, estimated at N20. 8 billion ($65.9 million).

The directive, which is coming amid foreign exchange supply shortages to the real and related sectors of the economy, will hit the nation’s reserve profile in the next few days.

The huge subsidy, representing 61 per cent loss when compared with the closing exchange rate of N318.91 as at Friday, will amount to billions of naira against taxpayers.

According to the CBN directive, each of the 65,170 pilgrims is entitled to between $750 and $1000, and judging the average Nigerian’s disposition towards the greenback, the upper limit of $1000 would be the target of the majority of the pilgrims.

The reserves have remained stable at $26 billion for the past two months, with marginal gains and shortfalls.

The unstable movement of the reserves’ profile during the last two months has been attributed to savings and interventions by CBN under the newly inaugurated flexible exchange rate policy.

An analysis of the spread of the pilgrims across the six geopolitical zones showed that South East, made up of five states, has a total of 391 slots, with value estimated at $391,000 at $100 per participant.

•Excerpted from a Guardian report. Photo shows pilgrims during the 2015 Hajj.

Source: News Express

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